Exhibit 10.5
EXECUTIVE EMPLOYMENT
AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT
(this “Agreement ”) is made as of
September 12, 2007 by and among Smart Document Solutions, LLC,
a Georgia limited liability company (the “Company
”) and Frank Murphy (“ Executive ”).
Capitalized terms used herein and not otherwise defined have the
meanings assigned to such terms in Section 13.
WHEREAS, Executive has entered into
that certain Amended and Restated Employment Agreement dated
January 1, 2007 by and between the Company and the Executive
(the “ Existing Agreement ”).
WHEREAS, in connection with the
transactions contemplated by the Purchase Agreement, Executive
wishes to terminate the Existing Agreement without liability to the
Company or its Affiliates and enter into this Agreement with the
Company.
NOW, THEREFORE, in consideration of
the mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Employment .
The Company will employ Executive, and Executive accepts employment
with the Company, upon the terms and conditions set forth in this
Agreement, for the period beginning on the date hereof and ending
as provided in Section 6 (the “ Employment Period
”).
Section 2. Positions and
Duties . During the Employment Period, Executive will serve as
a member of the Board of Directors of the Company (the “
Board ”), a member of the Board of Directors of Smart
Holdings Corp. and as the Chief Executive Officer of Smart Holdings
Corp., the Company and its other Subsidiaries, provided that
Executive will not be obligated to become or remain an officer of
any company (i) whose organization documents do not provide
indemnification provisions reasonably satisfactory to Executive and
(ii) which is not covered by the directors’ and
officers’ liability policy referred to in Section 11(b)
hereof. Executive shall have such responsibilities, duties and
authority as are assigned to him by the Board; provided that all
such services and functions shall be reasonably consistent with the
position of Chief Executive Officer and within Executive’s
area of expertise. Without limiting the foregoing, Executive will
be responsible for the overall business of the Company and its
Subsidiaries, including strategic planning, management recruiting,
strategic relationships, capital formation (under the guidance of
the Board), operations reviews and oversight, and investor and
financial community relations, and will render such managerial,
analytical, administrative, marketing, creative and other executive
services to the Company and Holdings and its other Subsidiaries as
are from time to time necessary in connection with the management
and affairs of such Persons (including the management of the
business and affairs of the Company and its other Subsidiaries), in
each case subject to the authority of the Board. Executive agrees
to devote such of Executive’s business time, attention and
energies as are necessary for the diligent performance of
Executive’s duties hereunder. Executive will report directly
to the Chairman of the Board, Patrick J. Haynes, III. All other
employees of the Company and its Subsidiaries will report, directly
or indirectly, to Executive. Executive will perform
Executive’s duties and responsibilities to the best of
Executive’s abilities in a diligent, trustworthy,
businesslike and efficient manner.
1
Section 3. Location .
Executive’s duties hereunder will be performed in the greater
metropolitan Alpharetta, Georgia area, subject to customary travel
obligations as will be required in the diligent performance of such
duties. The Company agrees to maintain an office for Executive in
the greater metropolitan Alpharetta area as is approved by the
Board, and to provide all equipment, supplies and other items
reasonably required for the performance of Executive’s duties
under this Agreement at such office.
Section 4. Salary and
Benefits .
(a) Salary . During the
Employment Period, the Company will pay Executive salary in the
amount of $437,000 per year (as in effect from time to time, the
“ Salary ”) as compensation for services. The
Salary will be payable in regular installments in accordance with
the general payroll practices of the Company and its Subsidiaries,
but in no event less frequently than monthly. Executive’s
Salary will be reviewed on at least an annual basis, beginning on
the one year anniversary of the date of this Agreement (such
anniversary date, each anniversary date thereafter, and any
additional review dates as described in the proviso hereto, a
“ Date of Determination ”); provided that
additional reviews shall be conducted as soon as practical
following the receipt of three full months of financial statements
of the Company subsequent to any add on acquisition to the Company
or any of its Subsidiaries. Such reviews will be conducted by the
Board or a committee designated by the Board.
(b) Benefits . Executive
shall be entitled to the same perquisites and benefits as are made
available to other senior executive employees of the Company, as
well as such other perquisites or benefits as may be specified from
time to time by the Board. During the Employment Period, the
Company will provide Executive with family health and dental, life,
long-term disability and Directors’ and Officers’
liability insurance under such plans as the Board may establish or
maintain from time to time for senior executive officers of the
Company and its Subsidiaries (collectively, the “
Benefits ”).
(c) Vacation . Executive will
be entitled to four weeks of paid vacation each year.
(d) Reimbursement of Expenses
. During the Employment Period, the Company will reimburse
Executive for all reasonable out-of-pocket expenses incurred by
Executive in the course of performing Executive’s duties
under this Agreement which are consistent with the Company’s
policies in effect from time to time with respect to travel,
entertainment and other business expenses, subject to the
Company’s requirements with respect to reporting and
documentation of such expenses.
(e) Automobile Allowance .
During the Employment Period, the Company will lease for Executive,
or reimburse Executive for the reasonable costs of leasing, an
automobile of Executive’s choice; provided that in no
event will the Company’s obligations under this
Section 4(e) exceed $1,500 per month.
(f) Professional Education .
Executive’s attendance at professional seminars will be
decided on an ad hoc basis by the Board and Executive.
Section 5. Bonus .
During the Employment Period, Executive will be eligible to receive
an annual cash bonus of up to 100% of Executive’s Salary (the
“ Bonus ”) as determined and approved by the
Board. The Bonus to the extent payable, will be payable in
accordance with the general payroll practices of the Company and
its Subsidiaries, but in no event later than 30 days after the Date
of Determination for the year in which such Bonus
relates.
2
Section 6. Termination of
Employment . The Employment Period will commence on the date
hereof and will continue until the fifth year anniversary of the
date hereof (the “ Original Term ”), unless
sooner terminated as set forth in this Section. The Employment
Period shall be renewable for successive one-year terms thereafter
at the discretion of the Company (each, as applicable, a
“Renewal Term”). In the event the Company chooses not
to renew this Agreement at the conclusion of the Original Term, the
Company shall give Executive sixty (60) days advance written
notice of such intent. Failing such notice, this Agreement shall
automatically renew for an additional one-year period and shall
thereafter renew annually on the anniversary date of this Agreement
subject to the Company’s right to provide sixty
(60) days advance written notice of its intention not to renew
the Employment Period. The termination provisions are as
follows:
(a) By the Company, For Cause (as
that term is defined below), upon written notice to
Executive.
(b) Upon the death of
Executive.
(c) By Executive, up to 30 days
after written notice to the Company of resignation by Executive
(which time period will be in the sole discretion of the
Company).
(d) If Executive fails to perform
his duties under this Agreement on account of Disability (as
hereinafter defined), the Company may give notice to Executive to
terminate this Agreement on a date not less man 30 days thereafter
(“ Notice Period ”), and, if Executive has not
resumed full performance of Executive’s duties under this
Agreement within such Notice Period, then Executive’s
employment under this Agreement will terminate on the date provided
in the notice. As used in this Agreement, the term “
Disability ” will mean the inability of Executive to
perform Executive’s duties under this Agreement by reason of
a physical or mental disability that, after the expiration of more
than 26 weeks after its commencement, is determined to be total and
permanent by a physician selected by the Company or its insurers
and acceptable to Executive or his legal representatives (such
agreement to acceptability not be withheld
unreasonably).
(e) By Executive, in the event the
Company is in material breach of any of its obligations hereunder
and such breach is not cured within 30 days of written notice
thereof from Executive. A material breach of the Company’s
obligations under this Agreement includes, without limitation,
(i) a material change in Executive’s reporting
structure, responsibilities or obligations under this Agreement
without Executive’s prior written consent; or
(ii) Executive’s Salary, as in effect as of the date
hereof or as the same may be increased by the Board from time to
time thereafter, is reduced, unless such reduction is agreed to by
Executive in writing; or (iii) the Company requires Executive
to relocate to a place that is not in the greater metropolitan
Atlanta, Georgia area.
(f) By the Company, other than as
described in clause (a), (b) or (d) above, including in
connection with a Sale of the Company.
For purposes of this Agreement,
“ For Cause ” will mean Executive’s
(i) conviction of, or plea of guilty or no contest or similar
plea with respect to, either (A) a felony or (B) any
crime that causes Holdings and its Subsidiaries, taken as a whole,
a substantial and material financial detriment;
3
(ii) commission of an act involving fraud or
embezzlement with respect to Holdings or any of its Subsidiaries;
(iii) substantial and repeated failure (except where due to
illness, Disability or incapacity) to perform Executive’s
duties hereunder, which failure is not cured within 30 days after
written notice thereof to Executive from the Company which notice
will specifically set forth the nature of such failure and the
actions required to correct the same; (iv) commission of any
willful or intentional act of Executive that has the intended
effect of injuring the reputation or business of Holdings or its
Affiliates in any material respect; or (v) continued or
repeated absence from the Company, unless such absence is
(A) in compliance with Company policy or approved or excused
by the Board or (B) is the result of Executive’s
illness, Disability or incapacity; provided, however , that
the Company’s failure to achieve certain results will not be
deemed to constitute “For Cause” so long as Executive
uses Executive’s reasonable best efforts to perform his
duties under this Agreement.
In the event the Employment Period
terminates by reason of Executive’s resignation under
Section 6(c), death or Disability or the Company terminates
the Employment Period For Cause, Executive will not be entitled to
receive his Salary or any fringe benefits (except welfare benefits
which Executive elects to continue at his sole expense in
accordance with any welfare plans) or Bonus for periods after the
Termination Date. In the event the Employment Period is terminated
by the Company pursuant to Section 6(f) or by Executive
pursuant to Section 6(e), or in the event the Company elects
not to renew this Agreement pursuant to the first paragraph of this
Section 6, then so long as Executive continues to comply with
Sections 8 and 9, Executive will be entitled to receive
(i) severance payments in an aggregate amount equal to two
year’s Salary based on the Salary in effect at the time the
Employment Period is terminated and (ii) Benefits at the same
level as they are provided from time to time to the Company’s
senior management employees, for a period equal to two years from
the date of such termination. Any such severance payments paid to
Executive by the Company will be paid in 24 consecutive equal
monthly installments commencing one month from the Termination
Date; provided that Executive will be required to sign a
release, in the form as set forth in Exhibit A attached
hereto, as a condition to receiving such payments and
Benefits.
Notwithstanding anything to the
contrary contained herein, if at the time of Executive’s
termination of employment pursuant to either Section 6(f) or
6(e), the Company is “readily tradeable” as defined in
Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”) and Executive is a Specified Employee as
of such date, if the sum of the installments to be received by
Executive for the six (6) month period immediately following
the Termination Date exceed the Safe Harbor Amount, then the amount
in excess of the Safe Harbor Amount shall be paid to Executive with
the first installment payable immediately following the end of such
six (6) month period, and any amounts deferred as a result of
the application of this paragraph shall accrue interest at the
prime rate and shall be paid with the first installment payable
immediately following the end of the six month period.
Section 7. Resignation as
Officer or Director . Upon the termination of the Employment
Period, Executive will be deemed to have resigned from each
position (if any) that Executive then holds as an officer or
director of Holdings or any of its Subsidiaries (including his
membership on the Board and the board of directors of any
Subsidiary of Holdings), and Executive will take any action that
Holdings or any of its Subsidiaries may request in order to confirm
or evidence such resignation.
Section 8. Confidential
Information . Executive acknowledges that the information,
observations and data that have been or may be obtained by
Executive during Executive’s employment relationship with, or
through Executive’s involvement as a member or
4
stockholder of, Holdings or any Subsidiary or
predecessor thereof (each of Holdings, any Subsidiary or Affiliate
or any such affiliate predecessor being a “ Related
Company ”), prior to and after the date of this Agreement
concerning the business or affairs of the Related Companies
(collectively, “ Confidential Information ”) are
and will be the property of the Related Companies. Therefore,
Executive agrees that Executive will not disclose to any
unauthorized Person or use for the account of Executive or any
other Person any Confidential Information without the prior written
consent of Holdings (by the action of the Board), unless and to the
extent that such Confidential Information has become generally
known to and available for use by the public other than as a result
of Executive’s improper acts or omissions to act, or is
required to be disclosed by law. Executive will deliver or cause to
be delivered to the Company at the termination of Executive’s
employment with the Company or its Subsidiary, or at any other time
Holdings or any of its Subsidiaries may reasonably request, all
memoranda, notes, plans, records, reports, computer tapes and
software and other documents and data (and copies thereof)
containing or relating to Confidential Information or the business
of any Related Company which Executive may then possess or have
under Executive’s control. Notwithstanding the foregoing, the
provisions of this Section will not apply to information required
to be disclosed by Executive in the ordinary course of his duties
hereunder.
Section 9. Non-Compete,
Non-Solicitation .
(a) Non-Compete . Executive
acknowledges that during Executive’s employment relationship
with, or through Executive’s involvement as a member or
stockholder of, any Related Company, Executive has and will become
familiar with trade secrets and other Confidential Information
concerning such Related Companies, and with investment
opportunities relating to their respective businesses, and that
Executive’s services have been and will be of special, unique
and extraordinary value to the foregoing entities. Therefore,
Executive agrees that, during the Employment Period and for a
period of one year thereafter (the “ Noncompete Period
”), Executive will not directly or indirectly own, manage,
control, participate in, consult with, render services for, or in
any other manner engage in any business, or as an investor in or
lender to any business (in each case including on Executive’s
own behalf or on behalf of another Person) which constitutes or is
competitive with all or part of the business of Holdings or its
Subsidiaries (as and where the same is conducted or proposed to be
conducted by the Related Companies during the Employment Period, or
as of the end of the Employment Period if the Employment Period has
then ended). Nothing in this Section 9 will prohibit Executive
from being a passive owner of less than 5% of the outstanding stock
of a corporation of any class which is publicly traded, so long as
Executive has no direct or indirect participation in the business
of such corporation. By initialing in the space provided below,
Executive acknowledges that Executive has read carefully and had
the opportunity to consult with legal counsel regarding the
provisions of this Section 9(a).
/s/ FM [initial].
(b) Non-Solicitation . During
the Noncompete Period, Executive will not directly or indirectly
(i) induce or attempt to induce any employee or independent
contractor of any Related Company to leave the employ or
contracting relationship with such entity, or in any way interfere
with the relationship between any such entity and any employee or
full-time independent contractor thereof, or (ii) induce or
attempt to induce any customer, supplier or other business relation
of any Related Company to cease doing business with such entity or
in any way interfere with the relationship between any such
customer, supplier or other business relation and such entity. By
initialing in the space provided below, Executive acknowledges that
Executive has read carefully and had the opportunity to consult
with legal counsel regarding the provisions of this
Section 9(b). /s/ FM [initial].
5
Section 10. Enforcement
. The Company and Executive agree that if, at the time of
enforcement of Section 8 or Section 9, a court holds that
any restriction stated in any such Section is unreasonable under
circumstances then existing, then the maximum period, scope or
geographical area reasonable under such circumstances will be
substituted for the stated period, scope or area. Because
Executive’s services are unique and because Executive has
access to information of the type described in Section 8 or
Section 9, the Company and Executive agree that money damages
would be an inadequate remedy for any breach of Section 8 or
Section 9. Therefore, in the event of a breach of
Section 8 or Section 9, any Related Company may, in
addition to other rights and remedies existing in their favor,
apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce,
or prevent any violations of, the provisions of Section 8 or
Section 9. The provisions of Section 8, Section 9
and Section 10 are intended to be for the benefit of each
Related Company and their respective successors and assigns, each
of which may enforce such provisions and each of which (other than
the Company) is an express third-party beneficiary of such
provisions and this Agreement generally. Sections 8, Section 9
and Section 10 will survive and continue in full force in
accordance with their terms notwithstanding any termination of the
Employment Period. By initialing in the space provided-below,
Executive acknowledges that Executive has read carefully and had
the opportunity to consult with legal counsel regarding the
provisions of this Section 10.
/s/ FM [initial].
Section 11. Representations
and Warranties .
(a) Executive . Executive
represents and warrants to the Company as follows:
(i) Other Agreements .
Executive is not a party to or bound by any employment, noncompete,
nonsolicitation, nondisclosure, confidentiality or similar
agreement with any other Person which would materially affect
Executive’s performance under this Agreement.
(ii) Authorization . This
Agreement when executed and delivered will constitute a valid and
legally binding obligation of Executive, enforceable against
Executive in accordance with its terms, subject to bankruptcy,
insolvency and other similar laws affecting the rights and remedies
of creditors generally and general principles of equity.
(b) The Company . The Company
hereby represents and warrants to Executive as follows:
(i) D&Q Insurance . The
Company shall maintain directors’ and officers’
liability insurance in an amount of no less than $3,000,000, and
that Executive will be covered under such policy while serving in
all capacities contemplated hereby.
(ii) Authorization . This
Agreement when executed and delivered will constitute a valid and
legally binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to bankruptcy,
insolvency and other similar laws affecting the rights and remedies
of creditors generally and general principles
